Present climate seen as good time to buy

When it comes to housing on Whidbey, it’s definitely a buyer’s market. Prices are down, inventory is up and interest rates are low.

The problem is, not a lot of people are buying, at least not as many as in previous years.

Real estate aficionados on Whidbey agree that the trend is largely the result of the subprime mortgage crisis touching the county, however lightly.

“We appear to be better off than most of the state,” said Jim Konopik, an associate broker with Windermere in Oak Harbor, “and northwest Washington is better off than the rest of the country.”

Still, the statistics for Island County tell a tale of “softening” sales. Northwest Multiple Listing Service reports 85 pending house sales in March of 2008, down from 120 a year ago. That’s a decrease of 29 percent. Total listings are up 30 percent to 1,076 — which is nearly as many as Skagit County.

Washington State University’s Center of Real Estate Research reports a 40 percent decrease in home resales in the fourth quarter of 2007, as compared to a year before. The number of building permits is also down by 31 percent over the same period.

Gregor S. Strohm, ASA, a respected real estate appraiser in Oak Harbor, cites three reasons for the lackluster sales of homes, all of which are related to the credit crisis.

First of all, there’s the confidence issue. People are worried that the nation may be in a recession and are cautious about spending money. They are aware that the housing market is at the center of the financial sinkhole.

“People are nervous,” he said. “They want to feel their property is going to be worth more in the near future.”

In a related reason, Strohm said, potential buyers may simply be waiting for the prices to hit bottom. The value of homes continues to drop. The median price of Island County houses sold in March, as compared to a year ago, dipped by 10 percent, from $290,000 to $261,000.

As a result, he said “trade-up buyers” are largely absent from the market. Those are people who already own a house and have no urgent need to buy, but they just want a better place to live. They usually make up a quarter of sales.

Lastly, Strohm pointed out that it’s more difficult to get financing in the wake of the credit fiasco. The so-called “liar loans,” or mortgages handed out without verifying income, are gone, as he said they should be.

Joe Niemer, the chief credit officer at Whidbey Island Bank, agrees that lending institutions have tightened up requirements. A few people who would have been able to get a mortgage a couple of years ago may have trouble now.

“You have to have a real job with real income to qualify,” he said. “But people with a work history and good credit shouldn’t have a problem.”

Niemer said he hasn’t seen a big increase in the number of foreclosures on the island, as there has been in other parts of the country. He posits that local banks probably weren’t in the business of handing out many subprime loans, which caused all the problems nationally.

Another positive point, Niemer said, that interest rates are still very low, often below 6 percent.

In general, those involved in the real estate market on Whidbey aren’t overly concerned. They see the current trends as part of a normal cycle and a return to rationality after a period of irrational exuberance in the real estate market.

Strohm said the homes that are selling are the “best examples in their price points.” In other words, houses are still selling in all price ranges, but those with any problems — like not enough bathrooms — could have a long wait.

Konopik, 20-year veteran, admits that things may be a little tougher for the average real estate agent on Whidbey now that the heyday has passed.

“Everybody is probably working harder and selling less,” he said. But he added that experienced real estate agents like himself are needed more than ever in the more challenging market.

An important factor that stabilizes the local market, Konopik said, is the Navy. People can depend on Navy families coming and going on a regular basis. Also, the presence of the base draws a reliable military retirement community.

Konopik said still another factor in Whidbey’s favor is that there’s never been a lot of speculative real estate on the island. In other places, he said, developers treated the real estate market like the stock market and that ended with a crash. He said they are building fewer “spec homes,” but instead focusing on pre-sold abodes.

Brian Gentry of Landed Gentry said things are looking up for building on the island. He said he’s seen an increase in sales in the last few months, while it was slower a year ago. His company is building homes in the Fairway Point neighborhood off Fort Nugent Road.

Nonetheless, he said it’s a great time to get a good deal on a new home because some builders have extra inventory.

“A lot of builders are trying to sell what they have before they build more,” he said.

Oak Harbor planning reports an increase in the number of building permits for single-family residences. They received 17 the first three months of the year, up from 14 over the same period last year. The Island County Planning Department, however, reports a 30 percent drop. In January through March of 2007, the department handled 67 building permits. Over the same months this year, the number was down to 47.

But with spring here, things should be picking up for both builders and real estate agents.

“Forty percent of all homes are sold in spring,” Strohm said.

You can reach News-Times reporter Jessie Stensland at jstensland@whidbeynewstimes.com or call 675-6611.